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Plenary, 26 Mar 2003

26 Mar 2003 · S1 · Plenary

Item of business

Scottish Economy

Gray, Iain Lab Edinburgh Pentlands Watch on SPTV

As Mr Neil probably knows, the first stage of project ATLAS came online early, and the second stage is still on time. Nevertheless, Scottish Enterprise has publicly made it clear that it has sought from the European Commission a ruling on any state-aid implications. I remain confident that those issues will be resolved and that project ATLAS will allow better broadband access for businesses throughout Scotland.

So all this is a smart, successful Scotland, with the addition of investment in company growth, in research and commercialisation and, above all, in skills; investment in transport and communications infrastructure; and investment in a culture of enterprise and aspiration as well as macroeconomic stability. This is a strategy based on which we are building new industries in biotechnology, photonics, software design and renewable energy.

There is no doubt that that strategy is a necessity across the economy. What is a successful, home-grown financial services company such as Intelligent Finance, if it is not built on innovation, the skills of its work force and investment support for its back-office functions in Rosyth and Livingston? Last November, I met senior executives of the J P Morgan bank to discuss with them their experience of setting up their European technology centre in Glasgow. They explained that they had chosen the site from 18 possibilities on the basis of infrastructural support in the financial services district and the available skills. Earlier this week, the bank announced an expansion of the centre and the creation of 150 highly skilled jobs. When I met State Street Bank, in the United States, to discuss its plans for the Edinburgh-based fund management operation of Deutsche Bank, it was assurances about investment in Edinburgh's public transport system that the bank sought. It has now taken out a long lease on its Edinburgh office and has thereby committed to Scotland.

Dundee has world-renowned biotech companies such as Cyclacel. It also has Michelin Tyres—traditional manufacturing, surely—which is driving up productivity by innovating in the production process, investing heavily in the skills and training of its work force and benefiting from the new, shorter and cheaper link to its markets that is provided by the Rosyth to Zeebrugge ferry. We are investing in innovation, in infrastructure and in people, whether in manufacturing, in the financial services sector or in retail. We are investing in every sector of our economy, old and new.

We will pursue this strategy with determination. It is for the long term, but we will continue to refine it. The Executive's response to the Scottish manufacturing steering group's report was published this morning. When I reconvened the Scottish manufacturing steering group, I set a tight timetable for it to report under Dr Masters's leadership. I undertook to respond to the group before the end of March, and today I did so in a letter to Dr Masters and the other members of the group. We have accepted 21 of the 23 recommendations that were directed at the Scottish Executive. Seven more will be discussed with UK ministers before August.

One initiative that flows from the report will target small businesses by establishing a pilot scheme of at least 300 business learning accounts over the next two years. A number of those will be targeted specifically at the manufacturing sector. Employers who are engaged in the pilot scheme will be reimbursed for 50 per cent of all business growth training.

All the effort and investment in economic growth is driven by the recognition that our growth rate is not good enough and that there is no quick fix. Our annual growth rate to the third quarter last year was 0.1 per cent, compared with 1.3 per cent for the UK. However, it is instructive to compare the rates when the electronics sector is removed from both figures. Growth for the remaining 94 per cent of Scotland's economy was 2.4 per cent, which outperformed the UK's figure of 2 per cent. Those figures are offered not as spin, but simply as an indication of the importance of electronics to our economy. It would be foolish to deny that factor and we must address it.

The electronics sector is performing poorly worldwide. However, there is evidence in the electronics industry in Scotland of what we need to do. For example, Wolfson Microelectronics was born from world-class research in the University of Edinburgh and now designs and sells from Scotland—production is done overseas—components contained in cutting-edge, must-have products such as the X-Box games console and the iPod MPEG player. That is a clear example of Scottish ideas coming out of the lab, on to the test bench and into global products.

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Plenary, 26 Mar 2003

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